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Part A qualification – regarding forming an opinion on the comparatives
Recently I was having a discussion with another auditor about the need for a standard Part A qualification when taking over the audit from another auditor.
The previous year has an unqualified audit report with no issues raised in the management letter.
It is a convention to issue a Part A qualification (as follow)
“With respect to the comparatives reported in the financial report of the fund, which was audited by Santa Claus ( previous auditor) per the unqualified audit report dated 25 December 20xx , I have been unable to obtain appropriate audit evidence to form an opinion on the comparatives.”
Doesn’t this give the ATO and their statistics the wrong impression of the audit?
( eg verses where there is real material differences that don't represent the accounts fairly & should have a Part A qualification.)
Does every auditor “paste” in this standard qualification in the year taking over?
Is there anything that you consider “appropriate audit evidence” that would allow you to exclude the qualification – other than redoing the previous year’s audit?
Hi Brian
My view is that you could only rely on the previous auditor's report and state this in the audit report if you reviewed what they had done.
Thanks
SMSF AAA
Hi Peter
In the annual return the Fund says Yes or No to Part A Qualifications but is to be answered as no if it is only an opening balance qualification.
That is the ATO does not get advised of Part A qualifications from the annual return re an opening balance qualification.
I have seen some auditors qualify re opening balances and some that do not re first year audits. My view is given the allowance by the ATO re the annual return the best practice is to qualify re opening balances in first year audits.
Extract from 2022 annual return instructions are:
"B Was Part A of the audit report qualified?
SMSF trustees may be penalised for making a false or misleading statement.
Has the auditor qualified Part A: Financial report of the SMSF independent auditor's report?
No
Print X in the No box.
Yes
Print X in the Yes box.
Answer 'no' if:
the audit report was not qualified, or
the audit report was only qualified in relation to insufficient audit evidence under Auditing Standard ASA 510 Initial Audit Engagements – Opening Balance.
Answer 'yes' if the audit report was qualified."
Thanks
SMSF AAA